XACIG(SH:600596) SINOLINK SECURITIES·2026-02-13 09:55Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 14.24 RMB based on a 30x PE for 2026 [3]. Core Views - The company is a dual leader in the silicone and glyphosate industries, with performance expected to recover against a backdrop of reduced competition [1]. - The company has pioneered a circular economy model utilizing chlorine, phosphorus, and silicon, achieving over 90% utilization rates for these elements [1][21]. - The company’s revenue and profit have been under pressure due to price declines in recent years, but improvements in supply and demand dynamics are anticipated to drive performance recovery [1][2]. Summary by Sections 1. Business Overview - The company operates in three main sectors: crop protection, silicone materials, and new energy materials, with a focus on integrating phosphorus and silicon materials [14]. - The crop protection segment has developed a comprehensive system covering intermediates, active ingredients, and formulations, contributing to food security [14]. - The silicone materials segment has a complete industrial chain from upstream silicon mining to downstream product manufacturing, with applications in over 130 countries [14]. 2. Silicone Materials - The company’s silicone segment is expected to benefit from improving supply-demand dynamics, with prices showing signs of recovery [1][54]. - The domestic market for silicone has a strong demand base, with a compound annual growth rate of over 10% in recent years [54]. - The company has a silicone monomer capacity of 500,000 tons, with approximately 80% used for self-produced downstream products [1]. 3. Glyphosate Sector - Glyphosate prices are expected to improve due to the promotion of genetically modified crops, with domestic production capacity constrained by policy [2]. - The company has a glyphosate active ingredient capacity of 80,000 tons, with a formulation conversion rate exceeding 70% [2]. - The company has developed a diverse product portfolio in the agricultural sector, including over 100 varieties of herbicides, insecticides, and fungicides [2]. 4. Financial Forecast and Valuation - The company is projected to achieve revenues of 147 billion RMB in 2025, with a net profit of 1.1 billion RMB, reflecting a significant recovery from previous lows [3]. - The earnings per share (EPS) are expected to grow from 0.081 RMB in 2025 to 0.673 RMB by 2027 [3]. - The report anticipates a recovery in profitability, with net profit expected to increase by 484% in 2026 [3]. 5. Market Position and Competitive Landscape - The company holds a 7% market share in the domestic silicone market, ranking fifth, and a 10% share in glyphosate, ranking third [1]. - The company’s revenue structure has shifted, with the agricultural segment's contribution increasing from 41% in 2020 to 49% in the first half of 2025 [24]. - The company’s profitability has shown volatility, particularly in the silicone materials segment, which has experienced significant fluctuations in gross margins [24].